What is IPO Subscription and What does it indicate?

Introduction to IPO Subscription

The year 2020 was pretty good for the equity market IPO (Initial Public Offering) segment. More than ten (10) companies went public in the whole year, and each of them witnessed record subscriptions. As a fact, three of the ten new IPOs received over a hundred times subscriptions. Companies from the food & beverages, IT, and BFSI industries hogged the limelight more than others. 

IPOs provide companies with the opportunity to raise money from the market by offloading a percentage of their ownership in the company. It also gives investors a lucrative opportunity to purchase the shares at an attractive price and profit at the time of IPO listing. Investors may also hold the shares for a more extended period to participate in the company’s growth story.  

You can invest in an IPO during the subscription period and check your IPO subscription status on a predefined date. The following sections give you an insight into the IPO process, reasons to know and ways to check the IPO subscription status.

What is the IPO Process?

Each new IPO goes through a series of similar steps. The company willing to go public has to hire an investment bank and register the IPO. After the registration application is verified by the Securities and Exchange Board of Indie (SEBI), the company applies to one or more stock exchanges for launching the IPO.

The company will then publicise the IPO to attract investors and decide the pricing. The issue is then made open for subscriptions. After the subscription period ends, the underwriter allots the shares. If the issue is oversubscribed, investors get partial allotment. As the final step, the IPO is listed. 

Why Should You Know The IPO Subscription Status?

IPO subscription refers to the number of times an IPO has been subscribed at stock exchanges. You can place your bid for an IPO with BSE or NSE. You can check the latest IPO subscription by visiting the website of the respective stock exchange. While the figures keep changing during the subscription process, you can get the final bidding details on the last day of the IPO subscription process. 

Generally, you can find between three and five categories of investors in an IPO. They are QIB (Qualified Institutional Buyer), NII (Non-Institutional Bidders), Retail Individual Investors, Employees, and Others. The other category of investors is Anchor Investors.  

Knowing about the IPO subscription status is vital when you apply for a new IPO. It offers you the following benefits:

1. You can understand its demand in the market and anticipate its listing price - the higher the demand, the better the IPO listing price might be. 

2. Seasoned traders/investors often analyse the retail participation figure in an IPO to decide whether to invest in the company after listing or not. 

3. You can decide your next course of action depending on the IPO allotment status. If you get the allotment, you have to wait till the listing to sell your investment or stay invested. If you do not get the allotment, you can use the money for other purposes. 

4. The grey market rates of an IPO depends on the IPO subscription data.

How to Check IPO Subscription and Allotment Status?

You can check the IPO subscription status by visiting the BSE website and finding details of the respective IPO. Alternatively, many brokerage platforms and newspapers publish the IPO subscription status regularly. You can conveniently check the investment status of the upcoming IPO, gauge investors sentiment, and decide whether you should invest or not. 

You can also check the IPO allotment status by following the steps mentioned below:

Step-1: Visit the BSE IPO subscription status website (link in the last step). 

Step-2: Locate the ‘Issue Type’ tab and select ‘Equity.’ The website also allows you to check debt investment status. 

Step-3: Select the name of the IPO. You need to click on a drop-down menu to find the IPO list.

Step-4: Type your application number in the box provided. You can find the application number in the acknowledgement receipt forwarded by the exchange/bank. 

Step-5: Enter your Permanent Account Number or PAN.

Step-6: Click on the box beside ‘I am not a robot’ and hit ‘Search.’ The BSE website will display your allotment status, including the number of shares you have been allotted.

If your name figures among the lucky few to receive the IPO allotment, you can expect the shares to be transferred to your Demat account within three days of the allotment date. However, if you do not receive the allotment, the blocked money will be released/ refunded before or after the listing.

In case you do not receive the refund amount, you may contact the official registrar of the IPO.

The EndNote

Learning about the IPO subscription status is crucial when you want to gauge the public sentiment before investing. It can help you manage your IPO investments better. With a record number of investors entering the market every quarter, we can only expect the good times to continue. 

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